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Forest View Acres Water District, March 23: Residents object to $25 per month fee increase
By John Heiser, Our Community News, April 1, 2006
At its regular monthly meeting March 23, the Forest View Acres Water District (FVAWD) board of directors heard from residents objecting to the $25 administrative fee approved by the board in December and ratified by the board in January.
Dan LaFontaine of Independent Water Services, the district’s contract water operations manager, reported that two leaks causing a combined loss of an estimated 65 gallons per minute were repaired in early March after a loss of 3.11 million gallons in February. The district has been losing large amounts of water since January.
The board consists of President Barbara Reed-Polatty, Brian Cross, Ketch Nowacki, and Eckehart Zimmermann. The vacancy created when John Anderson resigned in January has not been filled. All board members were present. Reed-Polatty presided.
Administrative, bookkeeping, and accounting services for the district are provided by Special District Management Services Inc. (SDMS). Deborah McCoy, president of SDMS, served as facilitator and secretary at the board meeting. She introduced Lisa Johnson, the SDMS district manager who will succeed Kammy Tinney. Tinney resigned due to personal health issues. District residents who have operational or management questions or comments are urged to contact SDMS at (800) 741-3254 or 488-2110.
Attorney Paul Rufien provided legal advice.
LaFontaine is responsible for maintaining equipment and infrastructure and for managing all aspects of water delivery.
Background
In December 2004, the board uncovered an apparent theft of funds from the district’s bank accounts. In February, a warrant was issued for the arrest of former contract office manager Patricia Unger on suspicion of embezzling more than $212,000 in district funds. That amount was later increased to $315,000. Unger surrendered to authorities Feb 16, 2005, and was released on $50,000 bond to await a preliminary hearing. Unger rejected a negotiated mediation agreement and waived a preliminary hearing. The criminal trial has been rescheduled to begin April 18, 2006. The felony charges Unger faces carry a potential sentence of four to 12 years.
The district has filed a civil suit against Unger and her husband, Dennis, to recover the missing funds and associated costs. The civil trial is scheduled to begin in August. The district’s attorneys hired Sheri Betzer, a forensic auditor. According to information released by the board, Betzer estimated the total financial loss to the district at not less than $625,000.
May election canceled
McCoy reported that the May election was canceled Feb. 28 because the district received only four applicants for the four open board positions. The new board of directors will consist of Rich Crocker, Nowacki, Reed-Polatty, Jeff Walker, and Zimmermann.
Nowacki expressed concern that the district is out of compliance with Colorado statutes that require board vacancies to be filled within 60 days. He proposed that the board make an appointment to fill the vacancy until the May meeting when the new board takes office.
Rufien noted that the only concern would be that the county could step in and appoint someone if the position were to remain vacant, but he said that would not happen. He added, "You are not out of compliance. It may be a spirit-of-the-law issue."
McCoy noted that there would be costs to prepare documentation for an appointment.
Nowacki’s motion to make an appointment failed, with the other three board members opposed.
Legal questions resulting from the missing funds
In response to questions from the audience about the liability of current and former board members for the missing funds, Rufien said, "For board members as individuals to be liable would require proof of intent to defraud the district." He later added that they would have to have gained financially.
As to suing the board as a whole for breach of fiduciary duty, Rufien said a high burden of proof is required. He added that district residents would wind up paying the substantial costs of defending the board. Further, Rufien said that since damage awards would be limited to each individual’s loss, to make financial sense "it would have to be a class-action lawsuit."
Rufien noted that based on the documentation he has seen, the criminal case points to "where the responsibility lies." He added that the case will produce an enormous amount of information for the district’s civil suit and that a not-guilty verdict would "point fingers elsewhere."
Responding to questions about the district’s insurance coverage, Reed-Polatty said the district did not have crime coverage.
Replying to a question as to whether the district could file for bankruptcy, Rufien said it would be difficult because it would have to be shown that adding 100 mills of property taxes would not be sufficient to cover the bills.
Referring to Rich Crocker and Jeff Walker rejoining the board in May, district resident Judy Michali said, "Having past board members on the board doesn’t give me a whole lot of confidence." She vowed to be more involved in district matters and encouraged others to do the same.
McCoy noted that the board now gets monthly copies of bank statements, lists of checks written, and financial statements. She said, "They didn’t get that before."
Comments on $25-per-month administrative fee increase
District resident Ted Hatzenbuhler objected to his monthly water bill of $90 for two people.
In a letter to the board, George Gaertner said, "I think the service charge on this bill is outrageous!"
Kelvin Delaney’s letter to the board said that adding $25 to the service charges is unfair to the consumer. He said that instead the fee for water should have been increased so the consumer could control their cost by controlling the amount of water used.
McCoy reported that some residents are withholding the $25 additional service fee. Reed-Polatty said those who do not pay their bill in full could have their service disconnected in accordance with the district’s rules and regulations.
Cross said, "We understand your frustration. We are members of the district and have to pay the fee." He later added, "You have a right to be angry. I agree that it is outrageous but we are trying to balance the budget."
Zimmermann said the $25 fee increase is needed to cover operational expenses, including the costs for SDMS and Rufien. He added, "We are hoping to collect something from the Unger case."
Nowacki added, "We were robbed. We’re hurting badly. Nobody else is going to pay for it."
Hatzenbuhler asked why the district is not using a mill levy to raise the additional money so residents could have an income tax deduction.
McCoy replied that, unlike the administrative fee, a property tax mill levy must be approved by a vote of district residents. She said an election could be held in November 2006, the new property taxes would apply in 2007, and the district would receive the funds in 2008. She estimated that holding an election would cost the district $8,000 to $9,000. McCoy added that she had recommended that the district seek a mill levy but that the present board is split on that recommendation.
Zimmermann said one of the objections to a mill levy is that it would likely be applied indefinitely.
Financial matters
McCoy presented a list of claims paid through March 23 totaling $14,571 that included $4,369 for LaFontaine’s services, $2,796 paid to the Palmer Lake Sanitation District, $2,670 for electricity, and $2,255 as final payment to Betzer.
The net cash balance for all funds as of Feb. 28 was $23,587.
The total for accounts payable as of March 8 was $124,046. That included $59,957 due attorneys Petrock and Fendel, $51,950 due SDMS, and $9,216 due Rufien.
Wilde billing dispute
District resident Leigh Wilde contends that due to an agreement with the Nevins family when he purchased his property, he has a right to free water service for up to 15,000 gallons per month.
Rufien said that based on his research the agreement was with the Nevins family and does not apply to Wilde.
As of March 17, the outstanding balance for water to the Wilde property from January 2005 was $827.
McCoy reported that SDMS is following the district’s procedure, which could result in disconnecting service if the bill is not paid.
Availability of service (AOS) fees
Johnson reported that AOS fees are being billed at $20 per month and that past due AOS accounts are being billed $20 per month for current charges and $20 per month to recover the past-due amounts.
Leaks fixed
LaFontaine reported that a leak surfaced in early March. Water was running out of the culvert at the intersection of Sandstone Drive and Red Rocks Drive. American Leak Detection Inc. located the leak, and it was repaired March 6. LaFontaine added that a leaking valve was located and repaired March 8. He estimated the two leaks totaled perhaps 65 gallons per minute.
During February, the district’s surface plant produced 2.97 million gallons, averaging 73.9 gallons per minute over 27.9 days. The district’s well in the Arapahoe aquifer produced 1.72 million gallons, averaging 107.5 gallons per minute over 11.1 days. The net monthly production was 4.35 million gallons.
Water sales for February totaled 1.23 million gallons.
LaFontaine calculated the net loss from the system during February was 3.11 million gallons or 253 percent of sales.
He added that since the leaks were repaired, the Arapahoe well has not been needed to meet the district’s needs.
LaFontaine’s contract approved
The board unanimously approved LaFontaine’s new contract.
The board considered a proposal enabling SDMS to authorize LaFontaine to spend up to $5,000 for unanticipated repair or maintenance expenses.
Zimmermann noted that LaFontaine is already authorized to make expenditures to respond to emergencies.
Nowacki said, "An emergency failure is not the issue, rather this would be for an unplanned replacement part."
The proposal failed, with Nowacki and Reed-Polatty voting in favor, Cross and Zimmermann opposed.
Executive session held on legal matters
Rufien requested an executive session to advise the board on legal matters.
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The next meeting will be held at 5:30 p.m. April 27 at Tri-Lakes district Station 1, 18650 Highway 105 (near the bowling alley). Board meetings are usually held on the fourth Thursday of each month. Those wishing to attend should check the date, time, and location by calling the SDMS at (800) 741-3254 or 488-2110.
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Residents object to fee increase; board considers proposing property tax
Forest View Acres Water District, April 27
By John Heiser, Our Community News, May 4, 2006
At its regular monthly meeting April 27, the Forest View Acres Water District (FVAWD) board of directors heard from residents objecting to the $25 administrative fee approved by the board in December and ratified by the board in January.
Board President Barbara Reed-Polatty noted that many other utility districts rely on a property-tax mill levy as well as user fees. Adoption of a mill levy would require a vote of district residents. A work session to discuss that and other topics is scheduled for May 12, 9 a.m., at SDMS, 141 Union Blvd., Suite 150, in Lakewood.
Dan LaFontaine of Independent Water Services, the district’s contract water operations manager, reported that two leaks totaling an estimated 65 gallons per minute were repaired in early March. The district has been suffering large water losses since January.
The board consists of President Barbara Reed-Polatty, Brian Cross, Ketch Nowacki, and Eckehart Zimmermann. The vacancy created when John Anderson resigned in January has not been filled. All board members were present. Reed-Polatty presided.
Administrative, bookkeeping, and accounting services for the district are provided by Special District Management Services, Inc. (SDMS). Lisa Johnson, SDMS district manager, served as facilitator and secretary at the board meeting. Deborah McCoy, president of SDMS, was also present. District residents who have operational or management questions or comments are to contact SDMS at (800) 741-3254 or 488-2110.
Attorney Paul Rufien provided legal advice.
LaFontaine is responsible for maintaining the equipment and infrastructure and for managing all aspects of water delivery.
Background
In December 2004, the board uncovered the apparent theft of funds from the district’s bank accounts. In February 2005, a warrant was issued for the arrest of former contract office manager Patricia Unger on charges of embezzling more than $212,000 in district funds. That amount was later increased to $315,000. Unger surrendered to authorities Feb. 16, 2005, and was released on $50,000 bond to await a preliminary hearing. Unger rejected a negotiated mediation agreement and waived a preliminary hearing on the charges. The criminal trial has been rescheduled to begin June 27. The felony charges Unger faces carry a potential sentence of four to 12 years.
The district has filed a civil suit against Unger and her husband, Dennis, to recover the missing funds and associated costs. The civil trial is scheduled to begin July 18 but, according to Rufien, it will likely be delayed. The district’s attorneys hired Sheri Betzer, a forensic auditor. According to information released by the board, Betzer estimated the total financial loss to the district at not less than $625,000.
Comments on the $25 per month administrative fee increase
In a letter to the board, Ruth Meinking said, “I strongly request that this additional charge be reconsidered and management determine other ways to pay this debt besides demanding more of the consumer.”
Ronald Warden’s letter to the board said, “I simply refuse to pay the new additional charge. I see absolutely no reason why the customers of FVAWD should be made to pay for the mismanagement of the previous board members which resulted in alleged theft of FVAWD monies.”
Resident Colette Feher-Laning expressed dismay at her $80 monthly water bill for very little water. She added, “What we are paying for is the embezzlement.”
Nowacki agreed, saying, “We are paying for [Unger’s] alleged theft and the cost to rebuild. Twenty-five dollars is a drop in the bucket.” He added that the district is preparing a capital improvement plan and associated financing plan.
Resident Richard Crocker, who will join the board at the May meeting, noted that most utility district boards budget 10 percent per year for infrastructure maintenance and improvement.
Reed-Polatty added that these costs are an investment in the value of the residents’ properties.
Cross thanked residents for coming to the meeting and getting involved.
Resident Susan Gates replied, “It is nice to have a board you can talk to.”
Financial matters
Johnson presented a list of claims paid through April 27 totaling $11,024 that included $4,487 for LaFontaine’s services and $2,421 for electricity.
The net cash balance for all funds as of March 31 was $36,136.
The total for accounts payable as of April 11 was $132,363. That consisted of $59,969 due attorneys Petrock and Fendel, $59,448 due SDMS, and $12,946 due Rufien.
Cross noted that the accumulating charges for SDMS are about $7,500 for the latest month and $5,821 for the prior month. He added that these figures are considerably more than what was budgeted.
McCoy and Johnson replied that some of the factors in the SDMS fees in recent months are preparations for the annual audit, support for the monthly work sessions being held in addition to the monthly meetings, and correspondence with residents regarding the fee increase.
Wilde billing dispute
District resident Lee Wilde contends that due to an agreement with the Nevins family when he purchased his property, he has a right to free water service for up to 15,000 gallons per month.
Rufien’s position is that the agreement was with the Nevins family and does not apply to Wilde. A letter to that effect has been sent to Wilde.
As of April 19, the outstanding balance for water to the Wilde property from January 2005 was $953.
McCoy reported that SDMS is following the district’s procedure, which could result in disconnecting service if the bill is not paid.
Leaks repaired
LaFontaine reported that significant leaks were detected and repaired March 6 and March 9. He estimated the two leaks totaled perhaps 65 gallons per minute.
During March, the district’s surface plant produced 2.09 million gallons, averaging 46.8 gallons per minute over 31 days. The district’s well in the Arapahoe aquifer produced 361,700 gallons, averaging 107.8 gallons per minute over 2.3 days. The net monthly production was 2.32 million gallons.
Water sales for February totaled 1.09 million gallons.
LaFontaine calculated the net loss from the system during March was 1.23 million gallons or 112 percent of sales.
He added that since the leaks were repaired, the Arapahoe well has not been needed to meet the district’s needs.
Executive session held on legal matters
Rufien requested an executive session to advise the board on legal matters.
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The next meeting will be held May 25, 5:30 p.m., at Tri-Lakes district Station 1, 18650 Highway 105 (near the bowling alley). Board meetings are usually held on the fourth Thursday of each month. Those wishing to attend should check the date, time, and location by calling the SDMS at (800) 741-3254 or 488-2110.
A work session is scheduled for May 12, 9 a.m., at SDMS, 141 Union Blvd., Suite 150, in Lakewood.
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Two new to Forest View
By: Nicole Osborn, Tri-Lakes Tribune
05/30/2006
Rich Crocker and Jeff Walker, both former members of the Forest View Acres Water District Board of Directors, returned to serve the board for another term.
Crocker and Walker joined the board May 2.
They, along with Eck Zimmermann and Ketch Nowaki were the only applicants for the four vacant board positions in the 2006 May election.
Crocker moved to the area in 1994 after he and his wife decided it was time for him to end his Army career.
Crocker served on the board of directors from 1998-2000.
He is a registered civil engineer in Colorado and holds a master's degree in civil engineering with a major in water treatment, hydrology and hydraulics. He is also a certified Colorado water treatment and distribution operator.
He said he hopes his experiences with maintenance, contract administration, capital planning, civil engineering and water treatment are useful for the district.
Crocker said he ran for the board position for a few reasons.
"I see the need for oversight of the FVAWD operations and maintenance planning, long- and short-range capital project planning and development, evaluation and inventory of existing conditions and water system modeling," Crocker wrote in a letter addressed to the board of directors. He said these are the aspects of the district he would like to work on instead of the financial and administrative aspects of the district.
He said he is glad to see progress is being made in the areas of operations and maintenance of the district's infrastructure since he began working with the board in January.
Crocker also said he ran for the position because he sees a need for communication with past board members about some unresolved issues in the district, including the alleged embezzlement case - in which a former worker who was independently under contract with the district allegedly stole as much as $625,000 from the water district - and recall which he thinks has "produced an atmosphere not conducive to good communications." He said he hopes to bridge this communication gap.
"If I learned anything (from) my past board experience, it is that we need to have reliable, competent support, demand proper documentation from our professional help, vigorously question and check their activities and hold them accountable for their work," Crocker wrote in a letter of introduction to Forest View Acres Water District residents.
Walker moved to the area in 1995 with his wife. He said they moved to Palmer Lake because they wanted somewhere out of the way and woodsy, but wanted to have access to Colorado Springs.
Walker said people asked him to be on the water board and that in looking at the people on the board now, "there really isn't anyone with a knowledge of the district's history."
Walker served on the board from 2000-2004.
He said he thinks he can bring a hands-on knowledge of how the system works as well as information about the history of the district.
Walker said there are a lot of things the board needs to work on, including fixing infrastructure. Walker added, however, the district does not have the finances to do so and there is too little communication between everyone involved in the district - the residents, management company and the board.
"I'd like to see what I can do to get people to work together," he said.
He said what happened in the past is over and now the district needs to move on and fix it's problems.
Walker said despite the many changes the district has undergone in the past couple of years, there are some things that have stayed the same and this is "at least something to work from."
Capital improvement projects and ensuring the safe delivery of water to residents of the district will be the primary focus of the board of directors, said board president Barbara Reed-Polatty.
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Embezzler hands over $300,000
Posted in HOA posts, Patricia Unger case, Forest View Acres Water District on June 23rd, 2006
Embezzler hands over $300,000
Patricia Unger is set to be sentenced Sept. 7.
By DENNIS HUSPENI THE GAZETTE
The woman who embezzled $300,000 from a north El Paso County water district will spend six months in jail and repaid district officials Thursday as part of a plea agreement.
Patricia Yvonne Unger, 56, pleaded guilty Thursday to felony theft in exchange for prosecutors dropping two other felony charges.
She admitted stealing checks from the Forest View Acres Water District, where she kept the books since 1994.
Unger said the thefts began in 1999 and continued until the end of 2004.
El Paso County sheriff’s investigators found at least 204 forged checks in her house.
“At the beginning, I always intended to pay them back,” Unger said. “I had no idea of the amount I took because I didn’t keep track. Towards the end, I knew it was greater than anything I could repay.”
The agreement, reached after mediation with a senior district judge, hangs an eight-year prison sentence over her head to ensure she completes the conditions of her six-year probation. Other conditions include: paying another $15,000 restitution at $250 a month, writing a letter of apology to the district and returning any district documents. She will be allowed to go to work from jail.
Unger gave district officials two certified checks Thursday totaling $300,000.
District officials agreed to drop the lawsuit against Unger in exchange for her plea and the restitution payment.
She told District Judge Edward Colt that she would write checks that were supposed to go to vendors to herself, deposit them in her account, then never pay the vendors.
Ratepayers in the district, which serves 280 homes in the Palmer Lake and Monument area, saw their water bills soar after the thefts were discovered.
“It’s the most we’ve ever paid for water in our entire lives,” said R. Gilbert Moore of Red Rock Ranch. “Now we have to figure out how to get out of debt.”
District officials estimate they lost more than $600,000 after factoring in lost interest, legal fees and audit fees.
“This brings closure but not celebration,” said Barbara Reed-Polatty, board president.
An independent management company now handles the district’s accounts.
The $300,000 restitution will help but doesn’t erase all the debt, Reed-Polatty said.
Deputy District Attorney Robyn Cafasso said a trial would have been lengthy and expensive.
The plea agreement offered a fair punishment for Unger and helped the water district recoup some of its losses, she said.
“I’m relieved it’s done,” Moore said.
Unger is scheduled to be sentenced Sept. 7. She remains free on $50,000 bail.
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FVAWD manager resigns as of Sept. 15
By: Nicole Osborn, Tri-Lakes Tribune
06/27/2006
Forest View Acres Water District operations manager Dan LaFontaine, of Independent Water Services, submitted his resignation June 15 and will leave the district Sept. 15.
LaFontaine said he is leaving the district because he would like to pursue another career outside of water district operations and because he feels there has been a change in philosophy by the people on the board and a change of direction.
"I'm not sure we see eye to eye," LaFontaine said.
There is no ill will between LaFontaine and the district, said Forest View Acres Water District Board of Directors President Barbara Reed-Polatty.
LaFontaine said while he has an idea what he would like to do next, he is not ready to announce those intentions publicly.
"He was here ... while the district was considered a quaint, little quirky district," Reed-Polatty said, adding the district is no longer the same.
The district has grown some during the seven years LaFontaine has been operations manager.
He said over the last seven years, it seems there has been a lot in the water district that has degraded, but there has not been a lot of money put into the system to prevent this.
Reed-Polatty said there should be an interim operations manager working with LaFontaine before he leaves, but the board has not officially decided whether this will happen.
The district will advertise for the position, but if LaFontaine leaves and there has not been a permanent replacement hired, the interim manager would be able to take over until the position is permanently filled.
LaFontaine said residents in the district could expect the water system to operate the same as it has the past seven years during his last three months with the district.
"I will continue to operate the system to the best of my ability," LaFontaine said.
He also said it has been an honor to serve the residents of the district over the past seven years.
"I wish him well," Reed-Polatty said.
In other news:
* The board of directors received their positions at the Forest View Acres Water District meeting Thursday, June 22.
Barbara Reed-Polatty will continue to serve as president of the board, Lisa Johnson - from Special District Management Services Inc. - will continue to serve as secretary, Eck Zimmermann will serve as treasurer and Ketch Nowacki, Richard Crocker and Jeff Walker will serve as assistant secretaries.
